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Dollar Hits New High On Easing Sino-U.S. Trade Tensions

5/21/2018, 1:44:46 PMBasics of Trading
Dollar Hits New High On Easing Sino-U.S. Trade Tensions

The dollar opened the week rallying against the other major currencies in Asia, climbing to a fresh new high this year. Risk appetite revived as the trade war between the world’s two biggest economies is put “on hold”.

The U.S. dollar index that tracks the greenback against a basket of six major currencies last stood at 93.79, up 0.21% at 12:09AM ET (04:09 GMT).  It was the highest level since mid-December last year.

U.S. Treasury Secretary Steven Mnuchin said on Sunday that the trade war with China is now put on hold. "We are putting the trade war on hold. Right now, we have agreed to put the tariffs on hold while we try to execute the framework," Mnuchin said.

The dollar picked up as China and the U.S. agreed to halt imposing punitive import tariffs. Chinese and American negotiators set up a framework to address the trade imbalances.

The USD/JPY pair added 0.40% to 111.21. As fears of the trade war faded, investors turned to riskier assets such as equities, which weighed down the safe-haven yen.

In China, the People's Bank of China set the set the reference rate for the yuan against the dollar, the mid-point from which the currency is allowed to trade, at 6.3852 versus the previous day's 6.3763. The USD/CNY pair gained 0.04% to trade at 6.3820.

Down under, the AUD/USD pair added 0.15% at 0.7521. Australia will see a light data week, except releasing its construction work done figures on Wednesday.